Selection Criteria for Redundancy

A redundancy situation can be complex for an organisation to navigate, particularly when this can result in job losses for valued employees. There are legal requirements that must be complied with to ensure that this process is dealt with fairly, one of these being the importance of using a fair and measurable selection criteria. Before embarking on any redundancy process, it will be important to be mindful of any agreed terms or policies which you may already have in place, and where such processes have already been set out, including any selection criteria.

 What is the legal definition of a redundancy situation

Before considering what a fair selection criteria look likes, it is important to understand if the situation the organisation is in meets the legal definition of redundancy. This is set out in the Employment Rights Act 1996 and an employee will be dismissed by reason of redundancy if the dismissal is whole or mainly attributable to:

(a). the fact that the employer has ceased or intends to cease to carry on business for the purpose of which the employee was employed by them or, to carry on that business in the place where the employee was employed or;

(b). The fact that the requirement of that business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.

When would you use a selection criterion?

A selection criterion is required where an employer identifies a group of employee’s from which it will select those who are to be made redundant. This is known as the “appropriate pool” of employees. Understandably, adopting a fair basis on which to select for redundancy can be a  challenging decision for employers, particularly if it is a small group of employees that are at risk of redundancy. If a whole team are no longer viable, or the business is closing, all the affected employees in that category are likely to be made redundant so a selection criterion would not be required. Similarly, if there was only one unique role which the business no longer needed and there is a “pool of one”, then a selection criterion would also not be necessary. However, where work has diminished and there is a requirement for fewer people to do that work, a selection criteria will be necessary to determine who will ultimately be made redundant.

At first glance, using a selection process may seem concerning as any poorly chosen or applied criteria may open the door to potential claims of discrimination or unfair dismissal. There is also the risk of the perception of bias, especially if employees believe the process was used to target certain individuals  or that the criteria itself is subjective and inconsistent. As such, it is imperative that an employer follows a fair procedure when dismissing an employee for redundancy by adhering to the guidelines as set out in the case of  Polkey v AE Dayton Serviced Ltd. An employer must consider what the appropriate selection criteria of employees for redundancy should be, otherwise there is a risk that the dismissal could be considered unfair.

What does this look like?

The selection criteria used by an organisation is at the discretion of the employer – there are no fixed rules. Whilst there is flexibility on what can be included as part of any selection criteria, this does not mean there is complete freedom in deciding the same. As established in the leading authority of Williams v Compair Maxam UKEAT/372/81), not only should  employers  warn and consult employees about their potential redundancy but also  that the selection criteria should be measurable as opposed to being based on personal opinion. It should be objective as well as being capable of independent verification. It is vital that transparency is key when deciding the selection criteria and that employers are specific in defining the type of considerations that are being assessed.

Such examples of fair and objective considerations include, but are not limited to:

Ø  Qualifications and/or experience;

Ø  Skills directly related to the current and future needs of the business;

Ø  Standard of performance;

Ø  Flexibility in filling more than one role; and /or

Ø   Disciplinary records.

An employer must be able to demonstrate that all relevant factors are  evidenced in clear documentation and/or measurable data as opposed to hearsay or informal notes. It is legitimate for an employer to attach weightings to the criteria, which reflect their relative importance, but any such weightings would need to be justified.

Are there any criteria to avoid?

Employers should avoid establishing a selection criterion on solely subjective grounds. This includes employees who would “keep the company viable" or employees who are “best suited for the needs of the business under the new operating conditions”. Such vague considerations cannot be relied upon as these would be deemed to be too vague and would  likely to be challenged by employees. In the matter of KGB Micros Ltd v Lewis, the Employment Tribunal held that the selection of employees for redundancy based on “costs saving” was unfair in assessing performance. Whilst costs saving may be considered a plausible reason for the business, the employer had failed to undertake any real appraisal of the employees and thus the selection process lacked objectivity. It is therefore important that employers seek objective measures even if the reason for redundancy seems reasonable and/or justifiable.

Interestingly, whilst at first glance “attitude” to work seems to be a reasonable consideration, in the matter of Graham v ABF Ltd 1986, “attitude” was considered “dangerously ambiguous and vague” when an employee was selected for redundancy due to his attitude to work and bad language. Ultimately, an individual’s attitude cannot be assessed objectively as it is opinion based. Perhaps, if there had been evidence such as, negative feedback from clients this may have been considered appropriate in assessing performance.

Whilst length of service is one of the objective considerations that an employer may consider, this must not be confused with the sole criterion of “Last In First Out” which my give rise to age and sex discrimination. Similarly, the sole use of attendance records also raises issues with those who may suffer with particular disabilities, have time off for family related leave or caring responsibilities for example. It is important to avoid using a sole criterion, instead employers should consider all factors as a whole and use a number of objective factors as part of a selection process.

It is always best practice to involve at least 2 or more managers when considering the selection criteria and implementing the scoring, to avoid bias.

What would be position if there was a tie break?

A tie-break situation can be extremely difficult to navigate, however, in this situation an employer may consider an assessment of the candidates’ ability to perform the role by way of an interview. To avoid bias, objectivity  should be built in  – using structured interview questions in accordance with the job descriptions. In the alternative, whilst “last in first out” should not be used a sole criteria, this may be utilised as a tie-breaker where candidates score equally on other criteria such as performance or skills. Ideally, a tie-breaker should be agreed with affected employees as part of the redundancy process at the outset.

 Of course, employers can always consider voluntary redundancy – inviting the candidates to volunteer, especially if an advantageous redundancy package is being offered.

Overall, during the process of using a selection criterion, it is critical that an employer communicates clearly, is transparent and is sure that all the factors considered for assessment are  evidenced clearly. More notably, employers should avoid pointing to one particular factor when selecting for redundancy– instead, a number of objective considerations should be assessed to allow a more thoughtful and objective approach when using a selection criterion. The scoring methods – however established, should be easily explainable and ultimately understandable for employees.